Do any of you need to lose some weight? I sure do! Having just returned from a five-day trip for my granddaughter’s graduation in Phoenix, I realized that the main focus of each day was eating. What are we having for breakfast? Who’s fixing lunch? Where are we going for dinner? These questions seemed to be at the forefront of each conversation, every day.
I knew I needed to shed a few pounds before I left, but now, it’s time to declare war. I’d like to lose 25 pounds. That is my goal. And I’d like to do that by July 15. Now, that’s a pretty lofty goal. However, I have about six weeks to do this. Twenty-five pounds sounds like a bunch of weight. But, a little more than four pounds a week for six weeks appears to be a much more attainable task.
It’s similar to when one wants to start saving for retirement, college education, or any other savings goal. If, for instance, your goal is to have $1 million for retirement, this may seem an impossible task. However, if you’re, let’s say, 25 years of age, and you want to retire at age 65, you would only have to save $297/mo. in an investment that gained 8 percent compounded, per year*. By breaking it down, it no longer seems like “The Impossible Dream.”
Like losing weight, it does take some discipline. Many have the luxury of dollars deducted from their paycheck, so they never see these dollars. (If you can’t see them, you can’t spend them). And some even have the good fortune of a company match.
Others will have to simply set up a disciplined program, possibly through a bank draft, in order to pay themselves first. The other bills are paid but you simply pay yourself before the other bills are paid. It truly does work! And just like the weight loss, it doesn’t happen immediately, but with time, a substantial nest egg develops.
What’s the most important ingredient? Certainly your dollars are imperative. And also, some sort of gain that outdoes the cost of living. But the most important ingredient is time. This is why it’s so important for young people to not only save, but keep it saved. Time is on your side.
For every year you wait, it will take that much more to get to your goal. If I lose four pounds a week for the next six weeks,
I will meet my goal. But if I fall off the wagon, just for one week, then the next week I’ll have to lose eight pounds — a much more daunting task.
I’m asked all the time, “When should I start saving for retirement?” My stock answer is always, “Now.” Why now? Because now is better than later, and later is better than not at all. So, it doesn’t matter if you’re 25 or 45, now is the best time to start saving.
I’m concerned with how many will be living strictly on Social Security in their retirement. And that’s if Social Security will even be there in their retirement. If not, then what? Good luck in your own savings plan.
* This hypothetical example is used for illustrative purposes only, and its results are not representative of any specific investment or mix of investments. Actual results will vary.
Tim Schumacher represents Strategic Financial Partners in Hays.